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    Haisla Nation, Pembina take FID on Cedar LNG


The US$4bn project is the first LNG facility in the world majority-owned by an indigenous community. [Image: Cedar LNG]

by: Dale Lunan

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Haisla Nation, Pembina take FID on Cedar LNG

BC’s Haisla Nation and infrastructure developer Pembina Pipeline said June 25 they had taken a positive final investment decision (FID) on their 3.3mn tonnes/year Cedar LNG project on the Douglas Channel, near Kitimat, BC.

“It has been a journey,” Haisla Nation Chief Councillor Crystal Smith said in a video posted to the Cedar LNG website. “It’s the first project of its kind – indigenous-led, majority indigenous-owned, essentially trailblazing a path for economic independence.”

“Together with our partner, the Haisla Nation, we are honoured to have made Cedar LNG a reality,” Pembina Pipeline CEO Scott Burrows said. “This is a historic moment, and we are proud to be moving forward with a project that will deliver industry-leading, low-carbon, cost-competitive Canadian LNG to overseas markets and contribute to global energy security, while delivering jobs and economic prosperity to the local region.”

Cedar LNG, a floating LNG facility, carries an estimated total cost of some US$4.0bn (C$5.5bn), 60% of which will be funded by asset-level debt financing. The remaining 40% of the project costs are expected to be funded through equity contributions from both partners.

Capital costs have been estimated at about US$3.4bn, of which US$2.3bn – or about 70% – is under a fixed-price, lump-sum agreement with Samsung Heavy Industries and Black & Veatch, the project’s engineering, procurement and construction contractors. The remaining US$600mn is interest during construction and transaction costs.

The facility is expected to be in service in late 2028.

Haisla Nation owns a 50.1% interest in the project, with Pembina Pipeline carrying a 49.9% interest. The Haisla Nation have obtained committed capital through the First Nations Finance Authority to fund its 20% equity contribution to Cedar LNG while Pembina continues to anticipate its equity contribution will be funded from cash flow from operating activities.

Prior to FID, Pembina was required to provide financial assurances to advance project-related upstream infrastructure projects, and those assurances will now be transferred to Cedar LNG, which itself has secured a letter of credit facility for the ongoing funding of the required financial assurances.

“As a result of the Haisla Nation’s vision and determination, today we are demonstrating Canada’s ability to sustainably grow its LNG export sector to support the global clean energy transition,” Cedar LNG CEO Doug Arnell said. “Moreover, the Haisla Nation and Pembina, as true partners, are demonstrating a new model for how industry and indigenous communities can work together for mutual benefit.” 

Cedar LNG has secured 20-year take-or-pay liquefaction tolling service agreements with both ARC Resources and Pembina Pipeline for 1.5mn tonnes/year each. Commercial discussions are underway between Pembina and multiple prospective customers to transfer Pembina’s tolling services agreement.

Canadian Prime Minister Justin Trudeau, who along with his environment minister Steven Guilbeault have been at odds with Canada’s oil and gas industry, congratulated the Haisla Nation and Pembina Pipelines for committing to the project.

“With Cedar LNG, Haisla Nation has been a leader in demonstrating how indigenous leaders and governments can and should work together in partnership to create prosperity and opportunities for the next generation,” he said in a video message.

The Shell-led LNG Canada project, which is nearing completion on Haisla traditional territory just up the Douglas Channel from Cedar LNG’s location, cleared the path forward for the Haisla Nation to embark on its own liquefaction and export project.

Among the agreements between Haisla Nation and LNG Canada was securing access to about 400mn ft3/day of capacity on Coastal GasLink, the TC Energy natural gas pipeline that will deliver natural gas to the LNG Canada facility. Securing access to a portion of CGL’s capacity allowed Haisla Nation to move forward with its own project.

“I want to congratulate the Haisla Nation and Pembina Pipeline on achieving this tremendous milestone and recognise how they have redefined the future of energy development in North America,” TC Energy CEO Francois Poirier said. “Through indigenous-ownership, Cedar LNG will create opportunities that will support indigenous and local communities in northern British Columbia and deliver benefits to the world by meeting global demand for more secure, affordable and sustainable energy.”